First-Mover (Dis)Advantages

First-Mover (Dis)Advantages

Marvin B. Lieberman, David B. Montgomery. 1998. (View Paper → )

Are resources and capabilities enhanced by early entry? The bulk of the FMA literature focuses on the potential for pioneering firms to acquire superior resources and capabilities. Early entry into an emerging market may facilitate such accumulations. But pioneers often miss the best opportunities, which are obscured by technological and market uncertainties. In effect, early entrants may acquire the ‘wrong’ resources, which prove to be of limited value as the market evolves.

Many people understand the concept of a first-mover advantage. However, few are aware that the authors who introduced the term admitted to some inaccuracies in their initial findings a decade later. This was because their original paper was based on anecdotal research. They acknowledged that being a first mover could have potential disadvantages, and the benefits of being a follower could be as substantial as those of being a first mover.